Car insurance: Women to pay the price for equality

Despite jokes about women drivers, for years they have paid less for car insurance because they are statistically safer behind the wheel.

But this is all set to change later this year.

A ruling by the European Court of Justice that bans setting insurance prices according to gender is due to come into effect in December 2012.

The ECJ ruled that the long-established practice amounts to illegal discrimination.

The result – women will pay more for cover. The cost of equality will see car insurance premiums for women increased towards the prices paid by their riskier male counterparts.

There is some good news for men however - their premiums are likely to fall as a result of the ruling.

Cost of equality

Gareth Kloet, head of car insurance at Confused.com, said prices for women will "absolutely" increase as a result of the ruling.

What happens now is that insurance is priced on risk – and women are statistically less of a risk on the road than men.

Kloet said: "But it's likely that as a result of the ruling insurers will take a cautious view to the risk when pricing insurance, and by cautious I mean that prices will rise.

"So there will be a levelling in the price discrepancy between men and women when it comes to the cost of car insurance.

"This does mean that men will see their costs fall – but not as much as women will see their costs rise."

Women to pay a third more

Indeed, research by the Labour Party published this month found that women will pay up to a third more - an extra £362 on average - if women's premiums are rounded up to men's levels.

John Woodcock MP, Labour’s shadow transport minister called the situation an "insurance time bomb".

He said: “At a time when motorists are already being squeezed by record fuel prices, women will be dismayed that out-of-touch ministers are not lifting a finger to defuse the insurance time bomb heading their way from Europe.

"Premiums for women are currently less because they tend to have fewer accidents.

"The government must not sit back and let the insurance industry round up to the highest level they think they can get away with – that could mean hikes of up to £360 for women."

Telematics-based car insurance uses a device to monitor driving behaviour, such as acceleration and braking.

By demonstrating responsible driving through this sort of monitoring, it is possible for drivers to prove to car insurers that they present a low risk, and insurance premiums may be adjusted accordingly.

How telematics works

A box, about the size of a packet of playing cards, is installed in the car to measure speed, braking and cornering, types of road travelled on, and time of day.

Drivers are able to log in online and monitor their driving skills. The data is sent electronically to the insurer who can then set car insurance premiums accordingly.

Woodcock said: "The ban on insurance by gender means women will need to find different ways to prove they are safe, but currently not enough insurers offer new black box technology that helps safer drivers get lower premiums."

The shadow minister said he would give insurance companies a year to offer a telematics insurance before considering forcing every insurer to offer telematics-based insurance to benefit safer drivers.

Rewarding responsible drivers

"That would benefit all responsible drivers – including women and younger people – who are being clobbered by sky-high premiums."

Kloet says: "Telematics provides a genuine opportunity for drivers to reduce the cost of their cover by proving themselves to be responsible drivers.

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Just one more way of charging more. I am already penalised because I am a widow, My premium went up, even though my husband had been on my car insurance! I am against gender rated inse. Men are notably worse drivers because of speed. I would have a 'black box' fitted, knowing that it would definitely lower my premiums.

they should leave things how they are they are just after more money out of people all the time when you dont get much money and on your own struggling to pay bills as well as car insurance its going to make it hard to find more money to pay out

If they are intent on not discriminating against drivers based on their level of risk, then surely that means young drivers should no longer be discriminated against due to them being more likely to have an accident? I've been driving for 10 years and I think it's shocking that even though i'm statistically less likely to have an accident than a man my car insurance is going to rise to cover the men that do have accidents. If this was the other way round, men would be up in arms about it and politicians would intervene!

Insurance has always been calculated on the basis of risk, women are seen as less risky as they have a lower number of serious accidents than their male conterparts, whereas young drivers get clobbered because they are assessed as having a greater risk of having an accident. Certain types of vehicle are judged as being more risky as they tend to be driven by a certain demographic, or are more powerful, or more attractive to thieves. Subsequently Insurance is by its nature "discriminatory", it's how risk is assessed. Surely if saying that its unfair to assess male drivers as being a greater risk then it is equally unfair to judge young or elderly drivers in this way too? For a system to be "non-discrimatory" surely all drivers should pay the same rate - perhaps a one for all flat rate £500/year insurance fee would cover it? As an owner of three vehicles I also advocate that the fee should cover the driver and not the vehicle - I only have one of my vehicles on the road at any one time after all...

If they cannot set prices on gender even though the statistics confirm they are safer. How can they set prices on age even though the statistics confirm young drivers have more accidents. Surely sexist and ageist are equally illegal discrimination.

I do think that this is a bad thing. The logical extension might be that age discrimination is also illegal for insurance quotes, so although I am male, I do feel that this is a retrograde step. Were I even more synical, I might suspect that insurers will increase their total take as a direct result.

Insurance has always been based on risk and there are a number of risk factors to be considered, including age, occupation, home address, years of driving experience. If they want to legislate to abolish discrimination, then there should be a fixed fee for insurance, based purely on the car value and engine size.

Why are British Politicians allowing Europe to stick there noses in where it's not wanted. If insurance can't be based on gender anymore then surely it shouldn't go on age. Is this not a form of discrimination against the younger driver

I think that insurance premiums should be based on your driving record. I have been driving powerful cars since 1962 - 50 years - without an accident. My current car is Group 18.I have only claimed once, when my car was damaged by someone trying to break into it.Why should I pay high premiums?

This EU ruling will be like Manna from Heaven to all the grasping insurance companies. There is no reason to charge woman more for their car insurance other than greed. The evidence exists that woman are less of a risk on the road so why do our ministers allow the interfering EU to change this type of legislation. As for introducing the use of telematics, I would like to see this made compulsery immediately and the information it provides should be used not only to provide cheaper insurance for careful drivers but to be set up iin such a way that drivers deemed to be anything less than safe on the road have the information passed to the police.Of course the weakness in this arrangement is that there are thousands of drivers who do not insure their cars anyway and this 'Big Brother' approach will force more drivers to avoid aying insurance.

The ruling is ludicrous, but we are stuck with it. However, gender is just one of a large number of risk factors which insurers use to determine premiums. There are others, such as accident record, convictions, age, type of car and occupation which will need to be weighted a little more to compensate for removal of the gender factor. Since the lower premiums previously enjoyed by women is based on them having a lower total cost of claims than men, the other factors which are indicators of that such as claim history, convictions and car type are still factored in. I can't help feeling that the insurance industry is hyping this up to soften consumers for some barely justifiable price hikes.

anyway, I think it's a good move. I think women sometimes forget what equality means, its not all one way, girlies! I understand why they'd be annoyed though, I wouldn't want to pay more money, but I'd put up with it in the end.

The 'fact' that women have less accidents than men is a myth. All the research available shows that women are involved in substantially more accidents than men. That is even with men driving more miles per year than women.

The risk which is referred to is risk to insurers because of relative expense of accidents, not risk of accidents. The quoted "Premiums for women are currently less because they tend to have fewer accidents." from the Shadow Transport minister appears to be false, unless you have some recent statistical data which shows otherwise?

I don't think the 'Black Box' is the way forward, if it sends back data about how fast your travelling to insurance companies, how long will it be before the police get the data sent to them and use the info to catch people speeding (even though you may need to in order to overtake)

Following on from rd's comment... not only are neither of them wearing seatbelts, but the girl in the driving seat hasn't got either of her hands on the steering wheel... and the girl in the passenger seat is pretending to steer... I often wonder how some people are let out of the house without supervision!

Does gender equality also stretch to age equality - does this mean life insurance for a 90 year old should be the same as for a 25 year old? Where do you draw the line??? Surely risk HAS to be taken into account in all insurance situations or none!!!

As a young female driver it is hard to pay insurance as it is. i have a part time job with poor wages coming in every month ive just about manage to pay mine fully then year. i know young men are in the same boat.

I'm definitely sick of being discriminated against, I am fast approaching 78 and been driving since 1956--- with no claims, ever. Bur my premium is hiked, slightly younger friends with the same car, but not the same record, pay much less insurance than I do, even though I only do about 5000 miles a year. I can't even afford the Confused got me. I would also agree to carry a breathaliser, because I don't drink, ever. BTW I was almost hit on a pedestrian crossing last week, by a female driving a mini coopper. Window open she must have heard what I called her.

i'm in agreement with jmb i also have been driving over50 yrs and never had a claim in fact i would need help claiming because i dont know how to go about it. the trouble with car insurance is that every thing is put in a computer and the results are based on statistics not individual performance. in the 60s at the age of 23 i was given the chance to buy a sports car on visiting my broker to enquire the cost of insuring it he contacted his head office and told me i was lucky as i had been with them from aged 17 without a claim they insure me at a favourable rate as they normally dont insure sports car drivers under the age of 25, i cant imagine that happening these days.

This issue perfectly highlights how statistics are routinely abused by governments and businesses (and in particular, government-mandated business, such as the car insurance industry).

Firstly, I don't want to pass judgement on gender and "safe" driving, and I don't dispute that the "typical woman" should pay less insurance than the "typical man". However, the actual statistics tell an interesting story...

A number of studies (such as this one - deepblue.lib.umich.edu/bitstream/2027.42/1007/2/83596.0001.001.pdf, see section 4) show that, whilst men have more accidents on the road overall than women, women are actually more likely to have an accident PER MILE DRIVEN than men. Men are still more likely to have a FATAL accident per mile driven, but this can be correlated to the number of motorway miles driven (an accident is more likely to be fatal on a motorway, and the gender gap for motorway driving is more pronounced).

So, whilst insurance companies can no longer ask you which gender you are, they CAN ask you how many miles you drive, and on which roads, and what your commute is like etc... and can therefore FAIRLY reach the same risk profile for the "typical" man or woman.

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Naphtalia Loderick

Naphtalia Loderick covers all things consumer for Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.